What would you do in this situation?

Question

Hi all,

I've had an "opportunity" come up and was hoping to get some opinions and/or hear from people who have had something similar happen.

I had a family member that knows I invest in real estate reach out to me today asking if I wanted to buy their house for $225k. After thinking it through and running the numbers on it, it just doesn't get me excited as a rental. That being said, I feel like very worst case I could turn around and sell it for $260k. It's in a newer developed neighborhood where most of the houses are just copy and paste homes and it's about 5 years old. I ran comps for homes on the same street, same bedrooms and bathrooms and anywhere from 120 less sq ft to about 120 more sq ft sold in 2026 and the prices ranged from $260k-$320k. I feel very confident I could sell for $280k-$290k after looking at the comps and I know for a fact I could make it out with $260k as a worst case scenario.

They have good reason to sell it to me but I can't seem to shake the feeling that it would be messed up for me to do that. It just seems a little messy to me for some reason. Have you all ever been in a similar situation with friends/family? How did you handle it?

Should I just be up front and tell them if I were to buy from them I'd probably just turn around and sell it myself and make some money and counter by asking if they'd be interested in me finding a buyer for $260k+ instead and we split the profits above $225k?

To add to the situation, they are aware that I'd instantly have equity in the property of $20k+ (they told me this themselves) but just want out of the home and wanted to check with me to see if I was interested before going in any other directions.

Thanks for any feedback!

Jaron Walling · Answer

@Logan Weber "It just seems a little messy to me for some reason." - That's because you're dealing with family. It's a good feeling to have and it says a lot about your character. YES, you should be honest with them and tell your plans. Unless you plan to move into the property (sounds like a cosmetic+ renovation) being honest is the only way to shake the feelings.

If they're asking $225k they may take less. Maybe they baked the family discount into the deal but make sure they're not hiding any surprises. It sounds like they have a lot of equity otherwise they would not be able to take this deal. It's less about the money and more about supporting your endeavors.

What's the demographic and path of progress look like in your market? You said it doesn't work for a rental (today) but what about in 3 years with conservative rent increases? The appreciation (probably 1-3%), principle paydown, and possible CF (depends on leverage) could make it a quality LTR for you. BUY QUALITY PROPERTIES in great locations and hold them when the numbers make sense. You can't go wrong even if it's breaking even after financing. Speaking of financing maybe they have low fixed rate debt. See if they're interested in doing an assumable mortgage. You would have cover the "equity gap" between the PP and the remaining loan balance, but it's a smart way to secure low interest financing. It could boost your chances of holding it as a rental.

Ashish Acharya · Answer

Logan, I’d handle the family piece with complete transparency before you decide whether to buy it yourself.

If you believe the property could realistically sell for $280K–$290K and they’re willing to sell to you for $225K because they want an easy exit, I’d tell them exactly what your plan would be: “If I buy this, I’m probably going to resell it for a profit.” If they understand that and still value the certainty, speed, and convenience of selling directly to you, then everyone is making an informed decision.

I’d also compare that with simply helping them list it or bringing them a buyer and agreeing upfront on how you’d be compensated. With family, preserving the relationship is worth more than squeezing every dollar out of one transaction.

From the tax side, if you buy it specifically intending to quickly resell it, don’t automatically assume that $50K–$60K spread will receive long-term capital-gain treatment. Property held primarily for sale as part of an active real estate business can produce ordinary business income instead. If flipping becomes a recurring activity for you, that’s also when I’d evaluate whether an S-Corp makes sense for the active business income rather than simply running everything through an LLC.

I’d be upfront with them, document that they understand the options, and then structure whichever path leaves both sides feeling good about the deal afterward.

Happy to connect!

Andrew Caranto · Answer

They already told you there's $20k-plus of equity and they just want out. They priced the gift. The messy feeling is you flipping a family house they handed you as a favor.

Say that out loud. Either you buy it as a rental at a number that still works after a real hold, or you help them get $260k-plus on the open market and you split what you actually create above $225k.

You're approaching this with the right heart though. Honesty is key start to finish. This is the value that investors are paid to capture. The emotional pain of having this house sitting in their mind and having you relieve it is more valuable than worrying about maxing out the equity gains.

Rick Albert · Answer

It could create some resentment if you instantly sell it for higher. What might be interesting is a joint partnership to get it sold. It sounds like they need the cash, otherwise they would just sell it themselves on the open market. Maybe there is a way you can give them part of the money and then you both split the profits after it is sold. If you don't get your price, then you pay the rest at a predetermined price and you rent it out.

I would also get clear on why they are selling and why at a discount. Is there an expectation that you don't do inspections and they know something? Is there an HOA with something like litigation coming down the pipeline? I'm not saying they are doing anything shady, this could be all unintentional, but I would still want clarity.

Divin Kanyama · Answer

@Logan Weber, I totally get why this feels messy. Even if the numbers make sense, family deals can get complicated fast if everyone isn’t completely clear on expectations.

Personally, I’d be very upfront with them. I’d explain that it doesn’t really work for you as a rental, but it may work as a resale opportunity — and that if you bought it, you’d likely be doing so to make a profit. That way there are no surprises later.

You could also give them options: they can list it and try to get full market value, you can help them find a buyer, or you can buy it at $225k if they’re truly comfortable with you potentially reselling it.

At the end of the day, I’d prioritize keeping the relationship clean over maximizing the deal. A profitable spread isn’t worth it if it creates resentment later.

Denise Supplee · Answer

I think it's good that you're stopping to think about it. When family is involved, I’d be very careful to make sure everyone is clear on the situation and feels good about the decision. If they truly want a quick sale and understand that you may be able to make a profit, that’s different than them feeling like they missed out later. I’d just have an honest conversation upfront and make sure expectations are clear on both sides.

What would you do in this situation?

What would you do in this situation?

Most Popular Reply

6 Replies